StoneX foresees diminished fertilizer imports in Brazil during H2 2022

High prices do not encourage farmers in Brazil to increase fertilizer imports, found the consultancy StoneX. According to the firm, “even if commodities remain appreciated, which could secure positive margins for farmers in the next harvest season, the increase in input costs also leads to increased financial risks in the event of production shortfalls.”

In addition, more expensive fertilizers demand greater investments and working capital in the pre-harvest, when most crops have not yet been commercialized.”

The consultancy conducted a study in June to understand how the demand for fertilizers would behave in the 2nd half of the year. According to the consultancy, as discussed over the last few months, exchange relations at levels historically unfavorable to agricultural producers should harm the growth of Brazilian fertilization.

Among the responses received, only a third of the participants, including sellers and consumers of fertilizers, stated that they weren’t planning to change the volume of fertilizers used in the 2nd half of the year compared to last year.

Grain producers are the ones who will most likely make cuts in fertilization this year, while sugarcane and coffee producers tend to maintain the same levels. In addition, the survey noted a greater drop in the demand for NPK in Brazil’s south and center-west regions and a smaller one in the country’s southeast.

Significant import volumes recorded in the first half of the year and decreasing consumer demand for fertilizers put stockpiles under strain at ports and mixers, a direct result of the mismatch between the recent rush to import and farmers’ lack of urgency to pay more for the input.

Please find below a chart displaying Brazil’s main fertilizer import trends, in terms of volume, from January 2021 to May 2022. The data below is from DataLiner.

Fertilizer imports – Brazil | January 2021 – May 2022 | WTMT

Source: DataLiner (click here to request a demo)

“As a result of high inventory volumes, decreased field demand, and the near removal of the scarcity risk relative hence the volume absorbed up to June, imports will tend to slow during the second semester, suggesting a lower need to ensure supply. Therefore, although Brazil has typically imported more NPK in the second half of the year, the volume that will land in the coming months will likely fall short of the ratio witnessed in the first semester of 2022,” concludes the consultancy.

Source: Jornal Cana

To read the full original article, please go to: https://jornalcana.com.br/stonex-ve-reducao-da-importacao-de-fertilizanrtes-no-2o-semestre/

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